Question 1

Before Keynes, most economists and politicians believed in a(n) __________.

Group of answer choices

A. cyclically balanced budget

B. annually balanced budget

C. structural deficit

D. budget that was balanced only at full employment

Question 2

Henry is a member of the Tea Party movement in Dallas, Texas. Accordingly, which of the following fiscal policies would Henry most likely support?

Group of answer choices

A. increasing sales taxes

B. funding more social programs

C. reducing government spending

D. increasing the federal budget deficit

Question 3

About 31% of the national debt owed to individuals is owed to __________.

Group of answer choices

A. foreigners

B. importers

C. loan cooperatives

D. venture capitalists

Question 4

A two-sector Keynesian model will be at equilibrium income when __________.

Group of answer choices

A. consumption is equal to planned investment

B. consumption is equal to disposable income

C. saving is equal to consumption

D. saving is equal to planned investment

Question 5

In the Keynesian model, at the equilibrium level of income, which one of the following statements is NOT true?

Group of answer choices

A. Planned spending equals actual output.

B. The economy is at full employment.

C. There are no unplanned inventory changes.

D. There is no tendency for the output level to change.

Question 6

In 2011, when the United States reached its debt ceiling, by how much was the debt limit increased?

Group of answer choices

A. $400 million

B. $4 billion

C. $40 billion

D. $400 billion

Question 7

The typical effect of a cyclically balanced budget is that, over time, __________.

Group of answer choices

A. fiscal policy tends to move in the wrong direction

B. deficits exceed surpluses, leading to an increased national debt

C. surpluses exceed deficits, leading to a reduction in the national debt

D. the size of government and its programs tend to shrink

Question 8

According to the authors, in recent years public concern over federal deficits and debt has grown because __________.

Group of answer choices

A. total output has risen more rapidly than imports

B. total output has risen more rapidly than exports

C. both have risen more rapidly than total output

D. both have risen more rapidly than revenues

Question 9

In the classical view of the credit market, the interest rate makes __________.

Group of answer choices

A. planned saving equal to planned investment

B. planned saving equal to actual investment

C. actual saving equal to actual investment

D. actual saving equal to planned investment

Question 10

Unplanned inventory changes are part of the adjustment process for goods-producing firms. How do service firms handle the adjustment process?

Group of answer choices

A. Service firms adjust their inventories in the same way as goods-producing firms.

B. Service firms are not able to make adjustments because they do not have inventory.

C. Service firms adjust the number of workers employed and the length of the workweek.

D. Service firms do not make adjustments because the fluctuations in demand are for goods, not services.